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Obama’s ‘Safe Workplaces’ Executive Order Not Necessary, SHRM Says

The Society for Human Resource Management (SHRM) has signed on to a letter criticizing President Barack Obama’s executive order aimed at the federal contractor workforce as redundant and burdensome, and asking the president to withdraw it.

SHRM and 18 other trade and professional associations sent a letter Nov. 6, 2014, to the White House and the Department of Labor opposing the president’s Fair Pay and Safe Workplaces Executive Order (E.O.) 13673. SHRM attended a White House listening session regarding the order in October. “SHRM has strong reservations about what more will be asked for due to the new order, as we believe current federal acquisition regulations already have a process in place screening contractors’ integrity and business ethics,” said Mike Aitken, vice president of government affairs at SHRM.

Beginning in stages in 2016, the order requires contractors with new contracts valued at more than $500,000 to disclose any labor law violations for the previous three years.

“Our tax dollars shouldn’t go to companies that violate workplace laws,” Obama said before signing the order. “If a company is going to receive taxpayer money, it should have safe workplaces.”

The White House explained in a fact sheet that federal contracting officers will take into account only the most egregious violations, and each agency will designate a senior official as a Labor Compliance Advisor to “provide consistent guidance on whether contractors’ actions rise to the level of a lack of integrity or business ethics.” Once awarded a contract, employers must update their violations history every six months. The White House also said that companies with labor law violations will be offered the opportunity to receive guidance as to whether those violations will result in restrictions and guidance to remedy any problems.

‘Fundamental Flaws’

The letter opposing the executive order noted that regulatory agencies already have the mechanisms in place to deal with labor law violations and that the order’s new enforcement plan “suffers from a number of fundamental flaws.”

​​“First and foremost, the President does not have the legal authority to make the regulatory changes that will follow from this E.O.,” the letter reads. “By directing the Department of Labor to develop guidance that will establish degrees of violations not included in the underlying statutes, the E.O. significantly amends the enforcement mechanisms Congress established for these laws. Simply put, the President is not authorized to change enforcement mechanisms in a statute without specific Congressional approval.”

SHRM and the other signatories pointed out that in addition to exceeding statutory authority, the order disregards existing enforcement powers the administration already has through the Federal Acquisition Regulation (FAR) and various labor laws.

“Congress has already provided strong enforcement mechanisms that both protect taxpayer dollars from egregious labor law violators while allowing for due process in applying those mechanisms to violations,” said Stan Soloway, president and CEO of the Professional Services Council, the national trade association for the government services industry. “The order would complicate and confuse that process by imposing new data collection, reviews, interagency consultations and procedures on top of the balanced and battle-tested enforcement regimens already in place,” he said.

The associations also expressed concern about “widespread disruptions” to the federal procurement process brought on by the implementation of the order.

“Given its highly subjective enforcement requirements, the E.O. will inevitably lead to delays in award evaluations, limitations on competition, and a greater number of contract award protests. Coupled with the other E.O.s issued this year specifically targeting federal contractors, the recordkeeping and reporting requirements in this E.O. significantly increase the cost and administrative burden of contracting with the federal government,” the letter reads.

“In the end, contrary to the administration’s claim, the unintended consequences will include a de facto blacklist,” Soloway said. “Companies, including the kind of innovative, small, nontraditional companies the administration says it wants to attract to our marketplace, will be deterred from participating by the costly burdens imposed by this and other growing compliance requirements.”